Four control components

Saarbrücken Formula

According to the Saarbrücken Formula, human capital consists of four components. The value base is made up of the number of employees as a quantity component (FTEi) and the market salary as a price component (li). The value loss or depreciation (wi/bi) provides information about the loss of knowledge in the company, triggered for example by the aging of knowledge over time. Depreciation is counterbalanced by value compensation, which contains the HR development costs (PEi). Finally, the value base is subject to changes since the motivation of each and every employee (Mi) can change. Value base, depreciation, value compensation, and value change are calculated for each employment group (i) and then totaled for the entire company. An employee group is constituted along company-specific strategic lines. Most companies will have identified functional groups in the scope of their organizational structure and procedural organization. Comprehensive methods are available for this identification process, including a standardized motivation survey as part of the Saarbrücken Formula system.